Babcock to Spin Off Power Gen Unit

The Babcock & Wilcox Company has approved a plan for the tax-free spin-off of the Company’s Power Generation business to B&W’s shareholders.

Babcock & Wilcox, which will comprise the Power Generation business, is a technology-based provider of advanced fossil and renewable power generation equipment that includes a suite of environmental controls, products, and services for power and industrial uses. This business is project-driven with a base of recurring aftermarket services revenues. As a standalone company, the Power Generation business, which will continue to operate under the “Babcock & Wilcox” name, will offer an investment opportunity with growth potential, particularly in international markets.

BWX Technologies will comprise the Government & Nuclear Operations business and will consist of the Nuclear Operations, Technical Services, Nuclear Energy and mPower businesses. This business is a supplier of nuclear components and fuel to the U.S. government, provides technical, management and site services to aid governments in the operation of complex facilities and environmental remediation activities, and supplies precision manufactured components and services for the commercial nuclear power industry.

Benefits

The Company believes that the spin-off will result in material benefits to the standalone companies:

Flexibility to deploy and execute a focused capital structure consistent with the strategic priorities of each business

Ability to attract an investor base suited to the particular operational and financial characteristics of each company

Greater management focus on the distinct businesses of power generation and government and nuclear operations

Leadership

Upon completion of the spin-off, Mr. E. James Ferland, currently President and Chief Executive Officer of B&W, will become Chairman and Chief Executive Officer of the new Babcock & Wilcox. Mr. John A. Fees, currently Chairman of B&W, will become Executive Chairman of BWX Technologies. Mr. Peyton S. (Sandy) Baker, currently President of the Company’s Government & Nuclear Operations Group, will become President and Chief Executive Officer of BWX Technologies.

Transaction Details

The spin-off of the Power Generation business and the pro rata distribution of shares of the new Babcock & Wilcox to B&W shareholders are expected to be completed by mid-summer 2015. The contemplated spin-off does not require a shareholder vote, but is subject to various conditions, including the effectiveness of the SEC filings, regulatory review by the Nuclear Regulatory Commission, and final approval by the B&W Board of Directors.

Advisors

JPMorgan is acting as financial advisor and Wachtell, Lipton, Rosen & Katz and Jones Day are acting as legal counsel to B&W.

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